Three billion is the forecasted number of global users that will have access to retail banking services through smartphones, tablets, PCs and smartwatches in 2021. It’s clear end-users prefer the convenience of online and mobile banking products, and the most successful banks and credit unions will be those who continue to partner with companies to offer digital products and stronger hybrid experiences. Yet, there is an execution gap that banks and credit unions need to address to gain and keep more market share.
If you need another reason to act fast, consider that responsible and reliable digital banking solutions can prevent pervasive fires and problems. According to a recent survey by Novantas, only 40% of respondents said they expect to return to branches post-pandemic. Older generations are adopting and expecting user-friendly fintech solutions. The next evolution of digital banking can significantly increase consumer satisfaction or damage user satisfaction if it’s a sub-optimal experience.
Your branches still hold significant importance in a trust-based relationship with the end-user. However, smaller financial institutions are racing to increase their digital engagement with their users because banks and credit unions with established digital banking solutions are outperforming those with less responsive, slower and outdated systems.
Post-COVID Consumer Loyalty
The financial industry has reached a tipping point, where financial institutions get their digital platforms right and get rewarded with customer satisfaction and loyalty. According to Paul McAdam, senior director of banking intelligence at J.D. Power, “Within the next year, digital will surpass the branch as the most commonly used retail banking customer advice channel.” Users are demanding more reliable online banking experiences, with near 100% uptime. Alternatively, less-than-favorable digital experiences erode the loyalty of even longtime consumers.
Mass business shutdowns and lockdowns due to the pandemic have forced transitions to online solutions that replicate in-branch experiences. People still consider their local branch their primary financial institution. However, patterns of loyalty are shifting. Digital-centric consumers are significantly less likely than branch-dependent consumers to say they will reuse their primary financial institution for their next financial services product — 55% versus 61%, according to J.D. Power’s Retail Banking Advice 2020. By continually improving your user’s digital experience, you can retain and attract members in a post-COVID era.
Digital Account Openings on the Rise
Nearly one-third (31%) of new account openings are executed through a financial institution website or mobile app, up from 22% in 2019. Conversely, new account openings in-person at branches has dropped by 10%, and now comprises just 55% of all new account openings. As a result, customer satisfaction with new digital account openings increased notably in 2020, according to another J.D. Power U.S. Banking Advice Satisfaction Study.
Smart digital banking solutions can drive stronger engagement with members. Consumers who use your custom digital tools within your website or mobile app are significantly more likely to interact with your bank or credit union to eliminate debt, budget, manage investments and prepare for retirement.
Great digital financial advice can be seen as a key differentiator for credit unions and banks when so many consumers feel unsatisfied with their current financial condition and aren’t confident they’re doing everything they can to meet their long-term goals. The need for ultra-responsive, zero downtime digital banking systems is more critical than ever to create better user experiences.
Zero Downtime as a Rule
Patience has worn thin due to the COVID climate. If you add older, legacy digital banking software platforms that weren’t built to update simultaneously while your system is running, you now have an already frustrated member considering other digitally-capable financial institutions to replace you.
Networks are being pushed to the limit and sometimes to their breaking points. Americans who checked their balance once a week pre-COVID may now be checking a few times a day. “Networks are often prepared for two or three times in volume, but businesses run into problems when capacity is pushed to 20 times the usual volume. It’s forced digital capabilities and capacity,” according to Brandon Larson, managing director at Novantas.
As the world continues to go digital, outages can happen. Recently, even one of the world’s titan mega-cap companies, Google, had an outage that impacted many of its servers. Many unprepared banks and credit unions will likely experience unnecessary outages and lag times. These old, outdated banking technology systems aren’t suitable to handle the increased volumes of digital transactions. If you don’t upgrade to continually improve digital banking solutions, outages and user frustrations may worsen.
Stimulus Check Slowdowns
Several banks and credit unions across the U.S. reported downtime and outages with online and mobile banking systems because of the sheer number of coronavirus IRS stimulus checks. Additional stimulus checks could wreak havoc on older systems forcing downtime and aggravating users. Interestingly, it also hints at the future of digital banking where savvy users will gravitate to banks and credit unions that can seamlessly handle the volume without outages.
Benjamin Franklin said, “An ounce of prevention is worth a pound of cure.” Many people confuse this as a statement about medicine, but he was advising fire-threatened Philadelphians in 1736 that preventing fires is better than fighting them. In this case, the adage still applies, where the fires are the problems resulting from outdated banking technology, and the prevention is implementing a robust and dynamic digital platform.
Reach out to Lumin Digital to learn how we can help you build a digital banking platform that’s ahead of the curve.
Marty Aquino has been a passionate writer on venture capital, technology, forecasting, risk mitigation, wealth, finance and entrepreneurial topics since 2009. He is the founder of Carbonwolf Energy, a venture-capital firm specializing in world-changing and status-quo-defying technologies and people.
Voice & Data – Digital banking users to reach nearly 3 billion by 2021
J.D. Power – 2020 U.S. Retail Banking Advice Satisfaction Study
J.D. Power – U.S. Banking Advice Satisfaction Study
Insight Vault – Who Wants to Bank With a Digital Bank?
The New York Times – Google’s apps crash in a worldwide outage